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Sentiment in Asia Pacific commercial property sector remained cautious as the region witnessed weak intra-regional trade, low commodity prices and sluggish global economic growth, revealed a quarterly sentiment survey by the Royal Institution of Chartered Surveyors. (RICS).
The Q2 2016 RICS Global Commercial Property Monitor showed that in Asia-Pacific, India and Japan are the only two markets in which both the occupier and investment index readings are in the positive territory.
Specifically, India saw both the investment and occupier sentiment indices – composite indicators encompassing demand, supply and expectations – improve in Q2 2016, with each measure recording its highest reading since 2011.
Notably, the pace at which commercial property supply is increasing in India has significantly eased in the last 12 months. With this, capital value and rental projections point to substantial near-term gains. Surveyors expect growth to accelerate across all areas of the market in the next three years.
In Japan, the commercial property market witnessed a period of sharp growth in investor demand between 2013 and 2016.
In Q2 2016, investment enquiries did not increase for the first time since 2011, with 70 percent of contributors saying the market might have already peaked. However, an exceptionally tight supply should support capital values in the near term as price expectations remain broadly flat in the next 12 months.
Australia’s commercial property market, on the other hand, remained relatively subdued. Despite a stable occupier demand, rental expectations remained depressed as availability continued to increase.
The latest results also showed that investment enquiries in Australia increased only marginally, while capital value expectations point to a flat 12-month outlook for prime sectors and a negative trend across secondary markets.
Meanwhile, the commercial property market in Singapore is set to plummet further, with chartered surveyors expecting rents to drop in the next 12 months.
Despite improvements in credit conditions, the city-state saw investor demand fall for the fourth consecutive quarter in Q2 2016. To lure tenants, landlords increased their incentive packages, although this is expected to have little effect on demand.
Meanwhile, in China, both the investment and occupier sentiment indices turned negative again after showing tentative signs of stabilising in Q1. Same goes for Hong Kong where demand fell for the fourth consecutive quarter.
Commenting on the survey, RICS Senior Vice President Chris Brooke FRICS said: “The feedback provided by chartered surveyors from throughout the Asia Pacific region clearly indicates overall market sentiment in the investment sector remains cautious.”
He noted that “investors may need to consider deploying capital in a broader range of geographical markets and real estate sectors throughout Asia Pacific to generate acceptable returns.”
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg